The accelerating decline and graying of Japan's population is expected to threaten the sustainability of administrative functions in large numbers of municipalities across the country in the not-so-distant future. A panel of experts at the Internal Affairs and Communications Ministry has compiled a report calling for the creation of area networks of cities, towns and villages to take charge of key administrative services for residents. Given the nation's daunting demographic trend, it seems obvious that tasking each small municipality to provide all services for local residents will be both inefficient and unsustainable. To ensure the future sustainability of administrative functions as the population shrinks, a deeper, more fundamental reform of the local government system should be explored.
What was considered by the expert panel was the shape of local administration in Japan's demographic landscape around 2040, by which time most of the postwar baby boomers' children — born in the first half of the 1970s — will have reached retirement age. At this time, the nation's population of people 65 or older will peak at about 40 million. The populations in more than 90 percent of the municipalities outside of the big metropolitan areas will be smaller than today, and the number of those with fewer than 10,000 residents will have increased by 26 percent from 2015. Local governments across Japan will face an acute shortage of younger workers to cover their manpower needs.
Public transportation and other basic services will be harder to maintain in rural municipalities with diminished populations. Many of those local governments will be in such dire fiscal straits that they won't be able to replace their aging public infrastructure. The fiscal health of municipalities in big urban areas may not be much better. In Tokyo, the sheer increase in the number of elderly residents will boost social security costs and result in a severe shortage of nursing care workers and care facilities. Nonetheless, local governments will be primarily tasked with maintaining administrative services for their residents, ranging from welfare to medical care, education and social infrastructure.